The new capital gains tax in Spain: key points

We talk about a tribute that generates many doubts and controversies. In this article, the professionals of the law firm, Despacho Lamas, located in Palma de Mallorca and with over 30 years of experience in real estate and property law, will explain the ten key points all that should be known about the capital gains tax reform and calculation of the municipal capitalization tax.

1. What is a capital gains tax?
Officially known as the Tax on the Increase in the Value of Urban Lands (IIVTNU), capital gains are the tribute that taxpayers must pay when selling, inheriting or receiving a home as a donation. The rate is levied on the part of the profit obtained in the transmission and it is the municipal tax that contributesthe most income to the councils, only behind the IBI (Real Estate Tax).

2. Constitutional Court ruling
The ruling of last October 26 declared unconstitutional certain articles of this tax, which supposes the nullity of the same by rejecting the calculation system.

3. Entry into force
The new regulation has come into force the day after its publication in the BOE, that is, on November 10, 2021. The Government will give the City Council six months to adapt its regulation to the new legal framework, and recognizes the possibility that correct up to 15% down the cadastral values of the land to guarantee that the tax is adapted to the real estate reality of each municipality, including Mallorca Island.

4. New coefficients
The Government sets new coefficients that will be applied to the cadastral value and that will be updated annually. Specifically, it is established that the taxable base of the tax will be the result of multiplying the cadastral value of the land at the time of accrual by the coefficients approved by the City Councils.

5. Two options
The taxpayer may choose between two options to apply the most beneficial: he may choose to calculatethe amount by the objective result of multiplying the cadastral value by new coefficients that will take into account the real estate reality (objective system) or he may opt for the calculation to through a real profit, with the difference between the sale price and the acquisition price (real capital gain).

6. Most beneficial system
The Ministry of Finance has provided some examples to understand the new calculation system and to know which of the two options may be more beneficial depending on the situation

7. Capital gains less than one year
As a novelty, capital gains generated in less than one year will be taxed, those that occur when less thanone year has elapsed between the acquisition and transmission date and which may be more speculative.

8. Exempt to pay
The new regulations exonerate those taxpayers who do not obtain a capital gain from the sale of the home. In this case, the non-existence of an increase in value must be proven by providing the titles that document the transfer and acquisition.

9. Claims
The ruling of the Constitutional Court does not allow taxpayers to claim self-assessments that are already final or that are not appealed at the date of the sentence, so the new regulations do not have retroactive effects.

10. Legal gap
The decree does not say anything about the period from the decision of the Constitutional Court (October 26) to its entry into force on November 10. A 15-day legal gap in which, in principle, taxpayers are exempt from paying.

More information you may obtain contacting the professionals of the law firm Despacho Lamas in Palma de Mallorca by +34 971 720 202


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